Markets and property types
ADU Investing: How Shane Sanders Gets Land for Almost Free
Shane Sanders builds two ADUs on lots he already owns, condoizes them, and clears about $160,000 profit per unit. Here's the full strategy, step by step.
Shane Sanders has figured out how to get land for almost free, build brand-new houses on it, and refinance out of the whole thing with roughly $160,000 of profit per unit: all in a down economy, all in his own small-town backyard. He's the guy who built a tiny home I once bought and then gave back to him for my resort, and what he's doing with accessory dwelling units in Washington is one of the more interesting strategies I've had on The Owner Meeting.
This works in many states but not all of them yet. It's catching on like wildfire on the West Coast. What makes Shane's version unusual is the piece he calls subdividing without subdividing, and it's the reason the math works at all.
The 30,000-Foot View
Here's the strategy as Shane describes it:
Buy a single family home or duplex on a large lot inside city limits, on a corner or an alley. Build two ADUs on that lot. Subdivide if you can: usually you can't, depending on the city. When you can't, use Washington condo code to subdivide without subdividing. That creates enormous value in the ADUs, because now they can be sold or financed independently of the main house.
That's the whole model. Everything else is execution.
From a 63-Cent Raise to Fences to ADUs
Shane went to Central Washington University in Ellensburg through the construction management program, got out, and took a corporate job. After his first year they gave him a raise of about 63 cents an hour.
His reaction: this isn't going to work out. It's going to take 40 years to really start making money.
So he started a fence building company on the side, worked it nights and weekends for a few years, then quit his job and did fences full-time. Around that time he bought his first rental (a single family home, back when interest rates were 3%) and did it again. He ran the fence business about five years. He's got maybe one job left in it now, and he's full-time on ADUs.
Related reading: From House Hack to 81 Doors While Working a Full-Time Tech Job
That's a pattern I see constantly in entrepreneurs. You have something you do to make money, it runs its course, and while you're doing it you discover either the thing you do best or a change in the landscape. In Shane's case it was the law.
You couldn't do this six years ago. Maybe in Seattle, but not in most of the towns Shane invests in: they allowed one ADU, with square footage caps. The new state code passed about two years ago, and June of this year was the cutoff for cities to adopt it.
It's still a gray area in places. In Ellensburg, Shane has a property where the city is requiring street improvements (about $80,000 worth) if he builds the second ADU, because he's already built one there. The new state code explicitly says cities cannot require street improvements on the basis that you're building an ADU. But Ellensburg got a one-year extension. So Shane's just going to wait to develop that second unit.
I have no patience for that kind of thing. On a beat-up motel I converted in downtown Moses Lake, the city required us to replace their transformer boxes when we redid our panels: an extra $65,000. Meanwhile I'm pulling Zinsco panels that are an active fire hazard out of the building, adding new roofs, new laundry rooms, a sprinkle of retail on Main Street, and I removed two drug-dealing tenants who were some of the bigger operators in town. That's the reward. There should be a dollar threshold on a project before you're required to pay for city infrastructure. At least the new law addresses it for ADUs going forward.
What an ADU Actually Is, and Why Shane Builds Detached
An ADU is an accessory dwelling unit. What Shane typically builds is a DADU: a detached ADU. It's a freestanding structure that looks exactly like a small house.
Under the new code they can be up to 1,000 square feet if the property falls under the new urban growth act. Shane's still learning the edges of it, but he doesn't believe closets and stairways count toward the total, so if you're strategic you can push them to around 1,200 square feet. That's a smaller three-bedroom, two-bath house. My wife and I lived in a 1,200-square-foot house in Renton for the first seven years of our marriage. That's a full-on house.
He's deliberate about how these read from the street. A lot of people build ADUs like a mother-in-law setup, with a sidewalk between the house and the unit and no fencing. Shane has separate tenants in every unit, so he designs it so that when you drive by you don't think "that's an ADU behind that house": you think it's just a regular small, new, nice house. Its own property.
And he's a believer in the asset class. Affordable housing, entry-level housing, tiny homes: he's even interested in using mobile homes as ADUs someday. There's demand for the lowest price point when the economy is good and when it's bad. As he's heard from Chris Cone and others, when the economy tanks it compresses from the top; the bottom can only go down so much. Plus the cash-on-cash return is better the lower you go.
I feel the same way. The bulk of my money is in entry-level housing, which means my money is boring and predictable. I don't need massive ridiculous upside. I'd take stability over anything. And there's often more margin down there, because people pay a premium for trophy properties and Class A stuff that carries much more variability.
Finding the Lots
Shane has never bought anything off market yet: he's looking at a couple this week, but everything so far has come off the MLS through Redfin.
Before he even looks at the house, every single listing that pops up in his markets gets the same treatment: go straight to the map, zoom in, and look at where the house sits on the lot.
- The lot has to be on a corner or an alley.
- If the house sits right in the middle of the lot, that often kills the deal outright.
- The house needs to be all the way front or all the way back. If it's small and at the back, you can treat it as the ADU and build a new single family home in the front.
- He's looking at access points for the other units, because each one needs to function as its own property.
He's lucky in Ellensburg and Wenatchee: he estimates half the properties in town are on alleys, which gives him rear access. Cities built from roughly 1950 onward generally don't have alleys; alleyways were a 1920s-to-1950s thing. The downside is that the existing house you're buying is usually 1920 to 1950, and Shane doesn't love buying old properties. But you end up with one old house and two brand-new ones.
One advantage of the current market: things sit on the MLS longer, so you have more time to shop them.
Condoizing: Subdividing Without Subdividing
Shane has never actually subdivided. He had one property that qualified, but the fees were heavy and the city said it might take 12 months. He passed and built ADUs instead, then condoized.
The interesting thing about condoization is that it has nothing to do with the city. In the city's eyes it remains one property, one parcel. The process:
- Go to a law firm, which drafts roughly a 50-page HOA and creates a condominium map. There's technically an HOA, but it's something like $30 a year per property, essentially for tax filing and keeping records current.
- Bring in a surveyor. Shane draws up a map of exactly how he wants the lot chunked up and they survey to it.
- Cost: about $15,000 to $18,000, and about three months.
- At the end, each unit gets its own APN, and they can be financed or sold independently.
Different states and cities handle condoization differently, but it works in a lot of markets around the country. That's what makes this strategy portable well beyond Washington.
Part of the new code talks about simple lot splits, and Shane plans to look into that once cities in his area adopt it. It may not be condoization forever: though subdividing often brings street improvement requirements and fees that condoizing avoids.
The Numbers on One Project
Shane is running a modified BRRRR. He'll sell at some point, but right now he builds and then does three cash-out refinances: one on each unit.
The lending fees are heavy, because there are four loans involved. He buys the property with one loan, and he can't simply refinance the ADUs, because the original loan was against the entire parcel. He has to release the dirt as collateral, which means three refis on top of the acquisition loan.
The land isn't 100% free, but it's close. The existing house takes about a 10% hit in value, because you're taking away its land and turning it into a condo. Shane figures he's into each lot for about $10,000 counting that loss: maybe $20,000 once he factors in condo fees.
Then the build. A general contractor would charge around $220,000 for one of these depending on size. Shane is the builder, so he's in around $120,000. The finished ADU is worth about $330,000.
After all fees, that's roughly $160,000 of profit per ADU, and he does two at a time. Just over $300,000 on one play.
So far he's completed two, has two more in progress, and bought one house with an existing ADU that he condoized.
He's also refined the model as he's gone. His first project was a single ADU on the lot. Now he only takes projects where he can do two, because the condo fee is basically the same and the timeline is about the same: a sub can hop from one to the other. Twice the profit in nearly the same time.
Competitive Advantage Is the Whole Game
This is the lesson I'd take from Shane even if you never build an ADU.
Development has two big expenses: buy land and build. Shane gets land for almost free and cuts his build cost roughly in half because of his construction background. That's a sustainable model.
It also means he can do deals other people can't. If you're not building it yourself, with an ARV of $330,000 and $220,000 into the build plus condo and financing fees, there's still profit, but the margin is thin in his market. In Seattle it'd be higher. Shane can take a lot with less margin than a builder would accept and still clear a bonus six figures.
The second question I ask about any business is whether it's scalable. This is, because it's a statewide law. He can expand outside his county, across Washington, and Oregon and California have essentially the same law. There's no shortage of large lots that can be condoized.
Scaling, Cash Flow, and the Draw Problem
Shane's been at this about two years and wanted to prove it before scaling. Now he's building a team: likely a full-time builder soon with a company truck and dump trailer who can move between projects, so he can run several at once instead of one at a time. The goal is 10 or more projects going simultaneously and 100-plus ADU units accumulated, selling some along the way to manage leverage.
His honest constraint right now is cash flow. When he does the cash-out refis and pulls 75% out, leaving 25% equity, it's a phenomenal equity builder but the properties barely cash flow: a couple hundred a month, enough for capex and maintenance, and there isn't much capex because they're brand new. So he's working out a rhythm: maybe refi everything on one project, then leave a couple of units on the next one owned outright, and alternate.
On holding ratios, what I've found is that if you keep your portfolio above a 1.5 DSCR you're in a very safe place. Banks like to see about 1.25 and you can push further, but at 1.5 it's very hard to lose your portfolio, and there's enough fluff to cover expenses and pay yourself. I'm sitting on about $47 million of debt: if you can pay yourself half of what you pay your lenders, that adds up to real money.
The other thing worth naming is that this is a development business, not a straight buy-and-hold. I learned this buying the resort: I own a lot of real estate there, but it's a business with real estate attached. Same here. Development eats cash and multiplies it. Your ceiling is how fast you can build, and building requires capital. So even as an anti-sell-things guy, I think Shane selling every other one is exactly right. Buy one, sell one, keep one. You still amass a massive portfolio, and the business gets fed.
Shane is also in the hardest phase of business: living off the company while trying to grow it. I went through it. I recently walked a property with a manager from a private company running 80,000 units, and when she starts a business she can run it at a loss for five years, add all the employees immediately, buy an office. Companies like that start so much faster because she doesn't need to draw from it. When you're starting in a small town, your biggest drag is that you also have to live.
His biggest anticipated hurdle is building the team. He went from zero to five employees in the fence business and had massive turnover, partly because fence margins are slim and you can only pay so much. There's more meat on the bones here. He'll still sub out nearly everything, but he needs the right full-time builder running between sites. Finding the right people is always the hardest part: you usually do as much firing as hiring.
The Stupid Tax: A Con Artist in North Las Vegas
I ask every guest for their most expensive lesson. Shane's:
He bought a subject-to deal in North Las Vegas. He's not entirely against sub-to, but he'd never scale that model, and he'd keep enough in reserves (in the stock market or similar) to pay the note off if it were ever called due.
The mistake wasn't the structure. He rented the property out without meeting the tenant, which he'd never done before, and didn't hire a property manager. He posted it on Zillow, got a stack of applicants, and settled on a single mom who uploaded pay stubs, a background check, a company phone number, everything imaginable. The pay stubs said she was an HR director. He called the company to verify, got a voicemail, nobody answered, and he'd talked to her a couple of times and she seemed nice and normal, so he rented to her.
She was a full-on con artist. She had an Instagram account promoting exactly this. She paid first, last, and damage deposit by credit card through Rent Ready. Forty-four days later Shane got an email saying she'd been banned. She had used someone else's card, and on day 44 (just inside what must be a 45-day window to report a stolen card) it was reported, the money was pulled back, and Shane had to run the whole eviction process. The place was trashed. He flew down twice and scheduled all the repairs.
Total cost: about $30,000.
Apparently there are companies you can hire that have a ready-made fake business website and supporting documents. Everything looked legitimate. The only thing he skipped was actually getting a human on the phone.
I told him about a deal I was underwriting where the owner had been paying for renovations for over a year on a 100-plus unit campus. The property manager was logging all the work orders, telling tenants they only got one repair per year (which was never the owner's policy) and marking every other request "repair completed." They paid a fake contracting company owned by a family member. They were getting paid to not fix the building. When we came in for inspection there were hundreds of open work orders, and we found the PM had been stealing since 2023. (For anyone wondering, that isn't the 144-unit I'm buying: it's a building in Waco, Texas.)
Shane also got a $12,000 proposal to replace the HVAC on a two-year-old house, with the contractor claiming the unit was 12 years old. He got it fixed for about $2,000 instead. And on a property I managed in Waco, the ACs kept failing until we installed cameras and caught the AC tech physically breaking them: he'd repair a unit, come back a week later, do minor damage, and generate his own next service call. First week the cameras were up, I saw his truck with no work scheduled, and two days later the AC was reported out.
The amount of fraud in every industry has been genuinely shocking to me over the last five years. If you're not watching everyone (employees, contractors, property managers) someone will try.
Key Takeaways
- The play: buy a single family or duplex on a large corner or alley lot in city limits, build two detached ADUs, and condoize so each unit gets its own APN.
- Condoization costs roughly $15,000 to $18,000 and takes about three months, and has nothing to do with the city.
- The existing house takes about a 10% value hit, leaving Shane into each lot for roughly $10,000 to $20,000: nearly free land.
- Building it himself costs about $120,000 versus roughly $220,000 for a GC, against a $330,000 ARV, for about $160,000 of profit per unit.
- Screen the lot before you screen the house: corner or alley access, house at the front or back, never the middle.
- Development is a cash business. Selling every other unit is how you keep the machine fed.
- Verify tenants by actually speaking to a human. Documents can all be manufactured.
Watch the Full Episode
The full conversation goes deeper on the new Washington code, the refinance sequencing, and Shane's plans to scale to 10 projects at a time. Watch it above, and you can reach Shane on Instagram at sugarshanesanders: he's considering putting together a course on implementing the strategy, which the ADU space genuinely doesn't have yet.
Shane's one piece of advice for new investors: find your competitive advantage and go for it. Do your due diligence and your homework, listen to the podcasts, and then take action. Don't want it to be easy: the harder it is, the more of your competition won't do it.
If you want to learn how I buy apartments with seller financing, my mentorship is at mentorship overview. The free course on getting started in multifamily is at multifamilystrategy.com/get-free-training, and our free community with a free calculator is on Skool under Multifamily Strategy.
Read the episode transcript
0:00 Hello and welcome back to Multif Family Strategy, the owner meeting podcast. Today we have a friend of mine, Shane 0:06 Sanders. He actually built a tiny home that I once bought and then gave back to him for my resort. I like this guy an 0:13 awful lot. He's been doing something in business that is super unique. It's something that you can do in uh many, 0:20 but not every state yet. This has been catching on like wildfire on the West Coast, the ADU strategy. But the way 0:26 he's doing it is super interesting. He has a way to get free land, add to his 0:32 income, and he did it all in a down economy. I am super excited to share this strategy with you guys, what he's been doing, how he's got there, and you 0:39 guys can see if this same strategy can work for you. Shane, welcome to the podcast. Hey, thanks for having me. Pumped to be 0:45 here. Absolutely. Okay, so give me 30,000 foot view of what it is you're doing and then 0:51 we'll dive into it as we go along. What What is the strategy we're going to be talking about today? Okay. So, basically 0:57 the highle view is buying a single family home or a duplex on a large lot 1:04 that's in city limits that's either on a corner or an alley and then building two ADUs on that lot 1:11 and then subdividing if you can. Normally, you can't, but it depends on the city in this situation. And when we 1:18 can't do that, we can go through Washington condo code and basically subdivide without subdividing these 1:24 properties. And that way we create, you know, a lot of value in the ADUs because now they can be sold or financed 1:30 independently of the main house. See, now that is impressive. Subdividing 1:35 without subdividing. We're going to get into all of this on today's episode, but teaser. We're not getting there just 1:42 yet. First of all, where did you start? What have you been up to the last few years before you stumbled upon this 1:48 strategy? Yeah. So, I went to college here in Ellensburg at Central for and went 1:54 through the construction management program. Got out, got a corporate job and then wanted to make more money. And 2:00 my first year, I got a raise of like 63 cents an hour or something like that after a year. And I was like, well, this 2:06 isn't going to work out. You know, it's going to take me 40 years to really start making money. So, I started a 2:12 fence building company on the side and was doing that nights and weekends for a few years. And then I quit my job and 2:19 did the fence building thing full-time. Right around that time, I bought my first rental property, just a single 2:25 family home when interest rates were 3%. Did it again. And then did the fence 2:31 business for about 5 years. And then um I'm pretty much done with the fence business now. I might have like one more 2:36 job and now I'm full-time on this strategy. Oh, that's awesome. And I I love the 2:43 fact that it's always been an entrepreneurial. It's like, hey, I got out. and fences. I built this to a 2:48 certain point. It ran its course. I found a new thing. I found a lot of investors and a lot of entrepreneurs 2:54 have found strategies like this where you you have something that you do to make money. It could be something that 3:00 you enjoy. It could be something where you're like, "Hey, this is just a need that I'm meeting, right?" And as you're doing that, you discover this is the one 3:06 thing that I do the best or there's a change. In the case of Washington State, there's been a lot of changes to the ADU 3:13 laws. I don't believe you could have done this six years ago, could you? Yep. Um, maybe in Seattle, but I don't 3:21 think so. But most of the towns I invest in, you definitely couldn't. Most of them only allowed one ADU and it could 3:27 only be a certain amount of square footage and everything like that. So, yeah, it's pretty much all When did the law officially changed to 3:33 allow the multiple ADU? I know it was fairly recent, last few years, right? Yeah. Well, it's a little bit of a gray 3:39 area. It passed like two years ago and then June of this year actually. So just a couple months ago was the cut off for 3:46 cities to adopt it. But like one of the cities I invest in, Ellensburg, they 3:51 basically have a property where they're requiring I do street improvements if I build the second ADU cuz I've already 3:56 done one ADU there. And the street improvements would be like 80 grand. Oh. In the new But the reason I bought that 4:03 property is because in the new state code, I read the whole pamphlet and it says cities cannot require street 4:08 improvements based on the fact you're building an ADU. But Ellensburg got like a one-year extension. So, it's kind of 4:16 depends on the cities. I didn't know that was an option, so that kind of sucks. But, I'll just wait to develop 4:21 that second ADU. So, really depends on the cities if they got that extension or not, or if they even qualify for this, 4:27 where most of them do, but some of the super small ones I don't think do fall under that category. I've always thought 4:32 that that just felt almost criminal for like the small. I mean, you you're doing 4:39 ADUs, right? You're not like a major developer in that you're bu you're not building a 200 unit apartment complex, 4:44 right? I did a hotel where I had a beat up motel, like really beat up motel 4:49 downtown Moses Lake, and they required that we replace all of their the 4:54 transformer boxes for the electric to redo our panels. I'm like, 4:59 gosh, we have Zinsco in there. They're a fire hazard in your beat up hotel. I am cleaning up the main street. I'm adding 5:06 a little sprinkle of retail in there. New roofs, new laundry rooms. We're taking out We took out two drug dealing 5:13 tenants. And they were like some of the big drug lords out there. We cleaned this thing up. What is the 5:18 reward? Hey, can you spend an extra $65,000 when you upgrade your panels to upgrade our transformers? 5:26 Yeah, there should be a threshold in my opinion of the dollar size of your project 5:32 for what you have to do in improvements. You just paying for city stuff because they can pass it. 5:37 Unfortunately, it's rampant out there. Grant County is right next to Kittitas County. I mean, I'm just right down the 5:42 right down the freeway from you. Some of these things I I don't think they should be allowed to do it on ADU. And it looks like 5:48 they did address that in the incoming law. So, that's uh Exactly. Now they can't. 5:53 Exactly. So, how did you get into the ADU build? You went from I mean, it's not a huge 5:59 jump, right? From fences and ADUs, but I mean, an ADU is not a fence. What was the what was the inspiration there? What 6:04 was the what was the pathing to ADUs? Yeah. So, one, I've just always been in construction and um so I wasn't that, 6:11 you know, that timid to jump into it, but um I've just always been interested in tiny homes, ADUs, just kind of 6:18 affordable living, even like mobile homes. I've yet to buy or, you know, set up any mobile homes, but it is something 6:24 I'm interested in potentially doing mobile homes as ADUs. I'm just I'm a big believer in affordable housing, creating 6:30 that lowest price housing just because I think there's such a demand for it when the economy is good and when it's bad 6:37 honestly. Um there's so many people just struggling right now. I just really believe in that asset class. I think 6:44 it's particularly good in a down I love entry- level housing. Uh hence like the 6:50 the hotel conversion where you come in, you add kitchenets, nice flooring, you make a really nice space. But a lot of those rooms, they're like 400 ft. It's 6:57 not a huge I mean for a hotel it's a decent size. When you convert it into an apartment it's a pretty small apartment. 7:04 You have a lot of resistance to a down economy. You're not going to move down 7:09 from your affordable housing, right? You're not going to go from a tiny home to a tent. So your your options there are fairly 7:16 limited and you can make really nice spaces. Like they're small but you can make really nice spaces in areas that 7:22 that's an actual need. You're doing something good for the city, good for the economy, and you tend to make a lot 7:27 of very stable money doing that. Yeah, exactly. And I've always heard too, like from Chris Cone and just other 7:33 people, you know, when the economy does tank, it kind of compresses from the top. The bottom can only, you know, go down 7:39 so much. And so that's kind of why I like that. That and just the cash on cash return is better the lower I go 7:45 typically. So that's why I'm all about that. Yeah, I'm a huge fan of it. And just as 7:51 a business owner, I like that. The bulk of my money is in entry- level housing, 7:57 which means my money is boring, my money is predictable, there's not that much going on. I don't need to have this 8:03 massive ridiculous crazy upside. I would prefer stability over anything. 8:08 Yeah, for sure. But you tend to also have more margin on those because for some reason people like to have trophy properties and class 8:14 A stuff which has a lot more variability to it and they'll pay a premium for it. 8:20 So, we'll take we'll take everything else. I love it. Yeah. Now, you had mentioned there's a way to get the the free land. You've hinted at 8:26 this. You talked a little bit about subdividing or subdividing without subdividing for a new investor or newer 8:34 investor. Tell us first of all, what is an ADU? And then let's talk about how you're getting the free land. 8:40 Yeah. So, an ADU is an accessory dwelling unit. And actually, what I typically try to do is DADUs or DATUS, 8:48 what I call them, and that's a detached ADU. So basically it's freestanding structure. It looks exactly like just a 8:54 small house. And now with the new code they could be up to 1,000 square ft. So basically I try to 9:01 Yep. Yep. If it falls under the new urban growth act. So and actually I'm kind of figuring out a little bit more 9:07 and more as I go. I don't believe closets are counted stairways and stuff like that. So you can, if you're 9:13 strategic, squeeze them up to like 1,200 ft², which is pretty awesome cuz basically just a regular three bed, you 9:20 know, smaller three bed, two bath house, which is pretty sweet. I uh for my entire time living in Reton, Washington, 9:27 so 7 years, my first seven years of marriage with my wife, we lived in a,200 9:32 foot house in city of Reton. That is Yeah. An absolutely 9:37 that that that's a full full-on house. Gets the job done. That's for sure. Yeah. 9:43 Oh, I love it. Okay. And now you can fit two of these. So, how are you um how are you finding the land for these? Cuz 9:49 that's you you have to have some space to buy. You're buying a property with a house on it already. You have to be able 9:54 to build effectively two. They're No, they're they're not even that small. Like two full-on houses on the lot. How 10:01 are you finding the land? So, I've actually never bought anything off market yet. I'm trying to. I'm actually looking at a couple this coming 10:07 week, but um everything's just been on Redfin on the MLS. What I do before I 10:12 even look at the house, every single thing that pops up in Ellwinsburg, Wachi in my markets, I go straight to the map, 10:19 zoom in and just look at the house placement on the lot. And also, if the lot, obviously, it has to be on a corner 10:25 or an alley. And then I'll basically zoom in and if the house is right in the middle, sometimes it just kills the 10:32 deal. It has to be all the way in the front or all the way in the back if it's smaller and then you could turn that 10:37 into an ADU and then build a single family home in the front. So, I'm just finding everything on market and um 10:44 yeah, house placement's huge. I look for, you know, access points for the other units because sometimes people do 10:51 ADUs and they really do it like a mother-in-law to where there's a sidewalk in between the house and the 10:56 ADU and they're not fenced off where I'm having separate tenants in all these. So, I try to do it to where when you 11:02 drive by one of these properties, you're not going, "It's an ADU to that house. It's just a regular small new nice house." 11:09 So, I try and do that just to make it, you know, its own property. Well, one of the fun things in today's market is 11:15 there's stuff that sits around on market a little bit longer, so you have more time to shop some of these. So, so the main thing you're looking for is you're 11:21 looking for the you're looking for the the actual physical space on the lot to build your project. And then you're 11:27 looking at access. How often are you finding these? If I was if I was to go to Red Fin in my area 11:34 today, how long would it realistically take me to find a deal? So, it really depends on which city 11:40 you're in. I'm kind of lucky because in my markets, Wachi and Ellensburg, I'd probably say half the properties in this 11:47 town are on alleys, which is great because that way we can get the access from the back where other fantastic. 11:53 Yeah. Where cities that are, you know, 1950 and newer, you're not going to have alleys. They basically did alleyways 11:59 from like the 20s to the '50s roughly. Mhm. Unfortunately, cuz I really don't like 12:04 buying old old properties, but with this strategy, that is one of the downsides is the existing house is typically 1920 12:10 to 1950, but then the ADUs are brand new. So, yeah, I was going to say, so you're buying you're buying an old property, 12:16 but then it ends up coming with two new properties, so it's your Yep. Yep. Exactly. 12:21 That's a cool That's a cool strategy. Now, uh how does the subdividing work? I I I 12:27 understand you if people have done this before been in real estate a while, but if if you're newer, how does the subdivision work and what does the 12:34 process look like with the city to get that done? So, I've actually yet to subdivide. I have had one property that qualified to 12:40 do it, but they had so many fees and stuff and it was like I think they said it was going to take maybe 12 months. 12:45 So, I was like, I'm not going to do that. I'm just going to build ADUs and then condoise. Okay. And this is this is your strategy 12:52 for uh for subdividing without having to subdivide. Yeah, exactly. And part of the new code talks 12:57 about like simple lot splits and stuff like that. And I've yet to dive down that just because the cities haven't 13:03 quite adopted that yet where I'm at. So that's something I'm going to dive into. And maybe it won't be condomizing in the 13:09 future depending on everything else that comes with it because a lot of times they're like, well, if you, you know, 13:15 subdivide you got to do street improvements and pay all these fees and this and that. So we'll see how that pans out. 13:21 Okay. Well, this this is interesting though because condoising it different states and different cities have different rules around it, but 13:28 condoising works in a lot of markets around the country. So, this could be a strategy that works for a lot of 13:35 different people depending on what city you're in. This is really interesting. So, what is what does this process look like? Let's let's say for an example, 13:41 hypothetical scenario, I bought my house. I built ADU number one and let's 13:46 say let's say we got the second one up too. We have we have two ADUs and an old house. What is your process to condoise 13:53 the other two parcels or propert one parcel but 13:59 Yep. Yep. So the whole time it's kind of a an interesting thing because it 14:04 actually has nothing to do with the city. So in the eyes of the city, it's still one property, one parcel or one 14:11 property I should say. But when we condoize, we go to a law firm and pay them and basically they'll draft a uh 14:18 like a 50page HOA and create a condominium map. So basically there is 14:24 an HOA but it's like $30 a year or something for the for each property and 14:30 it's basically just for like a tax filing and to keep things up to date. We go there then we bring out a surveyor 14:35 and the surveyor surveys the property. I'll draw up a map exactly how I want it chunked up. We'll go through that 14:41 process. It's about 15 to 18 grand and takes about three months and then at the 14:46 end of that they're each assigned their own APN and then we can finance them or 14:52 sell them independently of each other. That is really interesting. And so the ability to sell those individually, what 14:57 what do you what would you expect for a profit margin on these when you're doing your math? What what what do the numbers look like for your target project? 15:03 You're like, "Hey, this here's my projections. This is a green light." Yep. So, the profit margins are great 15:09 because I've basically created a couple competitive advantages and I've actually yet to sell anything. I'm basically 15:14 doing a modified version of the Burr. I'm going to sell at some point, but as of right now, I'll build them, then I'll 15:20 actually do three cash out refies, one on each unit. So, my my lending fees are 15:25 pretty expensive because I have to buy the property, then I have to do three cash out refies because I have to release the dirt as 15:33 collateral of the original loan. I can't just do refies on the ADUs because when I got that loan, it was for the entire 15:39 parcel. Doing this strategy, there's four loans involved doing the burr method of this strategy. And um yeah, so 15:46 basically I try to buy these houses as cheap as possible. And the reason for that is because the house does take a 15:53 little bit of a hit because we're taking away the land and now the house is a condo. So they typically take about a 16:00 10% hit. So, it's not 100% free land, but it's pretty close. I'm probably in each lot about 10 grand calculating in 16:07 my loss and the condo or maybe about 20 grand calculating in my loss and the 16:13 condo fees. But, um, yeah, so we do that and then build the ADUs. And since I'm 16:20 the builder myself, cuz typically to go to a GC and have them build it, they're charging right around 220 or so, um, 16:28 depending on the size of the ADU. Mhm. where I can do that for about 120 or so. So once that's all said and done, 16:35 the ADU is worth about 330 and I'm only to them about, you know, 120ish each. So 16:43 there's about 100. Yeah. After all the fees and everything, there's about 160,000 profit per ADU and 16:50 I'm doing two at a time. So it's just over 300,000 profit just for one play. 16:56 That's amazing. How many of these have you finished so far? I've done 17:01 so I've built I've only built two that are completed but I have two going on 17:07 right now and then I've also bought a house with an existing ADU and then 17:12 condoized that. That's so cool. What a what a fun strategy. And one thing that I like about this and 17:19 this works really well for most of the West Coast. You can do this. Y you get to do this in your home market. 17:25 You didn't have to go stretch out to, you know, far out cities or find somewhere like, "Oh, the tax code was 17:30 better over here." This is something that anyone can do in their own backyard, which is what I find 17:36 so interesting about this ADU project. Yep. Exactly. And now, like the first one that I did was just one ADU on that 17:43 lot. Now I'm only doing projects where I can do two because my condo fee is 17:48 basically the same and the duration is about the same because I can have a sub hop from this one to that one. Yeah. 17:53 Yeah. So, it's basically, you know, twice twice the amount of profit in almost the same amount of time to do two. 18:00 Oh, that's so cool. That's so cool. So, this strategy one, so there's another 18:05 thing I like and this is the lesson that I think I I would take away from this. I talk a lot about doing things where you 18:11 have a competitive advantage. You've done a fantastic job of identifying this is like you have the construction 18:18 background. You can build these. You can coordinate these teams for this. So you can have, you know, yourself, your subs, 18:24 you can get out there and you can save about $100,000 a build. Based on the 18:30 math you just shared with us, it cost you about $100,000 less to build it yourself than it would for a contractor 18:35 to do it. So you make an extra six figures every time you do this. You can do deals that 18:41 other people can't do in this market. You can find a lot and you can find deals that might have a little bit less 18:46 margin where it wouldn't make as much sense for a builder to do it. And you can come in still say, "Hey, I'm going to make a bonus six figures on this." 18:53 Yep. Exactly. And yeah, it's kind of tough if you're not building it yourself in this market just cuz the ARV of the 19:00 units are say 330 at the end. So if you're into it, you know, 220 plus your condo fees and financing fees, there 19:07 still can be profit to buy a property and higher a GC, but the margin is just a lot a lot more slim in this market 19:14 where in Seattle and stuff like that could be, you know, a lot higher. But but yeah, having that having that 19:20 competitive competitive advantage helps a ton and then um obviously getting the land for almost free. So it's basically 19:26 the same principles of developing your two biggest expenses are buy land and build and I can almost get free land and 19:34 then cut my build cost almost in half. So which is which is a very sustainable 19:39 model. And the nice thing is you can expand this because it's a statewide law. You can expand 19:45 outside your county. You can expand this as big as you want, which is the next thing I look at in any business is like 19:50 number one, do we have competitive advantage? Can I get in here and actually compete? Two, is it scalable? 19:56 And to the extent that you want to scale this, you can scale this about as big as you want. You can add more people. You 20:01 can add more teams. You can add more acquisition. Like this could be as big as you want it to be. There's no lack of large lots that could be condominiumized 20:08 or condoized. I don't even know what the term is, but Yep. Exactly. You can turn these things into condos just about anywhere with the 20:15 state level laws, which means Washington state is your market. And if you got really crazy with it, Oregon and 20:21 California have basically the same law. Yep. Exactly. Yep. But yeah, that's the 20:26 that's the plan now because I'm still, you know, I've only been doing this strategy for about two years, and I 20:32 really really wanted to prove it. So now I'm kind of working on building up a team and probably going to get a full-time employee here soon with a 20:38 truck, a full-time like builder who can go between these projects and get multiple going at the same time because 20:44 as of now I've only done one at a time, but I want to start stacking that and hopefully start doing, you know, five or 20:49 10 of these projects at a time and just scale a lot faster. That's what's the what what is the end 20:55 goal? What what do you want the company to look like? I always try to start with the end in mind. So, what is the the 21:01 target for what this company becomes or what this vision becomes? Um, I I want to go big. So, I'm hoping 21:08 to do 10 of these projects or or more at a time and stock up, you know, honestly 21:14 100 plus of these ADU units and then potentially start selling them as I go 21:19 just to, you know, keep whatever leverage ratio I want. Um, so I'm not 21:25 going getting, you know, too too levered out, but also utilizing leverage. So I'm 21:30 planning on scaling it big. Awesome. I I I found a really good holding ratios if you can keep your 21:36 portfolio above a 1.5 DSCR, the debt service coverage ratio. Yeah, that is usually a very very very safe 21:43 place where especially if you have a lot of properties. I I'm sitting on about $47 million of debt. Uh if you can pay 21:50 yourself half of what you're paying your lenders and you have a lot of you have a lot of payments to lenders, it ends up being a lot of money that you 21:57 end up paying yourself is what I found. Yeah, that seems to be the sweet spot is is 1.5 or higher for a holding BSDR. Banks 22:04 like to see about one and a quarter. You can push that a little farther. It is very hard to lose your portfolio. 22:11 Yeah. When you have that much fluff in there to pay your expenses and pay yourself. Sure. And yeah, that's one thing with this 22:17 strategy. It's like it's kind of tricky because once I do this and I basically 22:23 do the burr and do my cash out refies, if I pull all that or 75% of that money out, leave in 25% equity, 22:29 it's a great equity play and equity builder, but I'm really not having any cash flow on those properties. Couple 22:36 hundred a month, right? Enough to, you know, cover capex stuff and maintenance. Not that there's a lot of capex cuz 22:41 they're brand new, but that's why I'm trying to kind of figure out what I want to do. But I'll probably sell every 22:47 other one or every third one or hopefully keep doing this without selling and do one project where I do 22:53 all the cash out refies and then the next maybe leave a couple of those owned outright and then kind of go like that 23:00 just so I can start building up some cash flow cuz that's one thing I don't have is a lot of cash flow right now 23:05 because of this these cash out ref. Well, and on the on the strategy you're ending up with new buildings, right? I 23:11 mean that's that's what's so the strategy here the cash flow of the business because this is what you're 23:18 doing is it's you are doing buy and hold real estate but it's much much much more 23:24 development which means as a business you're a business that is heavily involved in real estate like a straight 23:31 multif family investment I I learned this buying the resort by the way but it's like resort I own a bunch of real 23:38 estate in the resort it's a business that is associated with real estate and has some real estate involved. This is 23:44 kind of the same thing. You have to have the cash flow of the business, which means yeah, you might have to sell 23:49 something to keep the capital up so he can keep building cuz your your limitation is how fast can I build 23:55 these? Like that is the floor of how much you can make. As a bonus, you get to hold some real estate. So, this is 24:00 one as an anti-ell things guy, your business requires or may require. Yeah. 24:08 You buy one or you sell one, you keep one. You sell one, you keep one, you sell one, keep one. Either way, you 24:13 amass a massive portfolio, but you have to keep cash in the bank because you're developing and development is a cash 24:20 business. You eat cash and multiply it. That's how it works. Yep. Exactly. 24:25 The the model makes sense to me. This is a this is a legitimate reason why one would sell real estate is 24:30 Yeah. Exactly. You can scale faster cash. you the business needs to be fed as much as the 24:37 real estate needs to be held. So you have the right balance in there. I think that's absolutely the right way to run this. 24:42 Yep. For sure. Yeah. Like I was saying, it builds a lot of equity and I'm kind of like, you 24:49 know, also living off that while I'm doing these cash out refies and whatnot because I don't have, you know, 24:54 basically any other income other than I have like a few thousand a month in cash flow and then just doing these cash out 25:01 refies cuz they're basically a perfect burr plus like an extra 150 grand. I get all my money back out, leaving the 25% 25:09 then get a chunk. So I'm just trying to kind of figure out figure out that balance of what's what's best. what what 25:14 you're in right now and what I'm I I went through this phase. Lots of people go through this phase. It's the hardest 25:19 part of business where you have to pay yourself and live on your business, which means you have 25:26 to eat some of the profit for yourself. I found especially as there's the, you know, all the levels above me. I just I 25:33 just went uh I just walked a property with a property manager, private company that manages 80,000 units. They are 25:41 Titanic. when she starts a business, she's like, I can just run it at a loss 25:47 for 5 years out of, you know, I can just pay the payroll and we can just add all the employees immediately. We can do all 25:54 the I'll go buy an office for the company. The companies start so much faster because she's like, I don't need the 25:59 money. I don't need to draw from it. I can run it a negative for an extended period of time. When you're starting a business, especially in a small town, 26:06 it's like, uh, yeah, your biggest drag is you also have to live while you're doing your business. Yeah. 26:12 Which slows down the growth of your business. It's very frustrating. Yeah. You you're going through all the 26:18 steps and you're doing it right. And that is uh I look forward to when I don't have to take a draw from any of 26:23 the stuff. Like you bank enough. You're like, "Ah, okay. Let's just let's start at the end. We'll skip all the build 26:29 steps. We'll skip building with profitability. We'll just I know what I'm doing. Let's let's run it and see 26:34 how it goes." Yes. That's a different level that uh you and I are both not quite at yet. 26:40 Yeah. Seriously, the the the taking a draw. It's like I have to make a living on this and I have 26:47 to hire more people to scale it. Yeah. One of the most frustrating pieces as 26:53 you um as you scale this, what do you think is the biggest hurdle that you're going to have to overcome over the next 26:58 year, year and a half to start adding some dimension to this and up your volume? Yeah, my biggest hurdle is probably 27:04 going to be building a team. That was one thing I struggled with with the fence business. I went from zero to five 27:11 employees and kind of bounced all around there and just had massive turnover. And that one was a little bit trickier 27:17 just because you can only pay fence builders so much because the profit margins are fairly slim with the fence 27:23 business depending on how you go about it. But with this one, there's a lot more meat on the bones. So, I'm hoping to build 27:31 out a team and I am still going to sub pretty much everything out. But that doesn't mean I don't need, you know, a 27:36 full-time experienced builder who's in a company truck with a dump trailer, that 27:41 sort of thing, driving around between the sides. So, I think my biggest hurdle is going to be finding the right people. 27:47 I I have found that that is always the hardest part. Yeah, you end up doing as much firing or 27:53 more firing than you do hiring. If you do a lot of the uh the business acquisition, I usually have to clean 27:58 house every time we acquire a company. Yeah. So, I I feel you there. I will be uh I 28:04 will be doing a set of fires this this uh upcoming Friday that's already 28:09 gez rescheduled. They have some equipment that I need back. So I'll be doing that in person which is my least favorite. 28:15 Yeah, good luck with that. That doesn't sound it's all it's all part of the business. But as you're doing this in the fencing 28:22 business, in the real estate business, and in all that you've done since college, what has been the most 28:27 expensive lesson that you've learned? I call this the stupid tax, but what's the, you know, whenever we're new at 28:32 anything, there's there's a price to pay for being new. What's uh what's been your most expensive stupid tax so far? 28:38 So, I I knew the stupid tax question was going to come. Good. Good. I always ask it long so 28:44 people have more time to think. Yeah. So, the stupid the worst stupid tax that I've made or mistake I've made 28:52 was I bought a sub two deal in North Las Vegas. And I'm still not completely 28:58 against sub 2, but I I would only do it I wouldn't would never scale that model and I do still have that property, but I 29:04 would try to keep that much in reserves like in the stock market or something. That way if that note is called due, I 29:10 could just pay it off. But basically what I did is I bought that property and I rented it out without meeting the 29:18 tenant, which I've never done. And I didn't hire a property management company. I just posted it for rent on 29:23 Zillow. got a bunch of applicants, went through everyone, found this one lady 29:28 that I was looking at and um she was a single mom and she uploaded payubs, 29:33 background check, company phone number, everything you could imagine. And I 29:38 looked through the payubs. She said she was like a HR director at a company, all this sort of stuff. I called the company 29:45 to verify and it went to a voicemail and no one answered. And I was like, you 29:50 know what? I talked to her a couple times. She seemed nice and normal. So, I rented it to her and basically come to 29:55 find out she was like a full-on con artist. She even had like an Instagram account promoting that sort of stuff and 30:03 she paid first. Yeah, she paid I got rent ready and that's what I use now. And I allowed 30:09 credit card payments. Didn't really think much about it. And she paid first class last damage with a credit card. 30:15 And then after like 44 days, I get an email from Rent Ready saying that she's banned. And I'm like, "What the heck's 30:21 going on?" And I look into it and turns out she used someone else's card and then on the 44th day because there must 30:28 be like a 45day limit to report if someone steals your card or something. They report it, pull the money out, and 30:35 then I had to go through that whole eviction process and the place was trash. It ended up costing me like 30 grand. Had to fly fly down there twice 30:41 and schedule all the repairs and stuff. So that was a stupid tax is not following through with all my due 30:48 diligence for screening tenants. Suck. Well, good thing it's only on one 30:53 tenant, so that's positive. Yeah, you want to keep the stupid tax to a minimum. But oh my gosh, that's 31:00 terrible. So So she had a she had an Instagram account about scamming places. Is that what is that what she did? 31:06 Yep. I was actually down in Vegas with a couple of my buddies and I was telling them this story and they start like typing in Instagram and stuff and I 31:13 still don't know her name. that was a fake name, but they somehow found the Instagram account like with her phone number or something and it was called 31:18 like fraud junkie or something like that and she did not have that job and just just a whole deal. 31:25 Wow. Apparently there's like companies that you can hire to who already have a 31:32 website of a fake business and like all this sort of stuff as a landlord. Like 31:37 obviously I should have got a hold of someone but it's it was pretty it looked super legit. Everything looked good. the 31:43 fake business had a website. Her payubs look perfect. All that sort of stuff, but I just never actually got a hold of 31:50 people and move forward. Anyways, there are thieves and scammers at every single 31:55 level. Yeah, I just found I was underwriting a deal and the 32:02 PM the owner was This is This is why you visit your properties. The owner was paying for renovations for over a year. 32:08 And what their property manager was doing was logging all of the logging all 32:14 of their work orders. And this is a big campus that 100 unit plus campus. 32:19 They're logging all the work orders. They told the tenants, "You only get one repair per year." That was not from the 32:26 owner. And so every other repair, they're going, "Oh yeah, nope. Uh, 32:32 repair completed." They paid a fake contracting company that one of their family members owned. They were getting 32:38 paid to not fix all of the problems in the building. And so, of course, when we 32:44 come in for inspection, there's a there's hundreds of work orders. I'm like, "We can't buy this." They was 32:49 like, "No, I've paid for all of this to be fixed." We found out their PM had been stealing from them since 2023. 32:57 Wow, that's crazy. So, the good news is you only got scammed by one tenant. Uh, they got 33:02 scammed by about 112 tenants accidentally at the same time because of one bad manager. 33:08 That is crazy. I I just It was not on the deal I'm buying right now. For those who are like, "Wait, aren't you buying a 144 33:14 right now?" It is not that building. It's another building out in It's in Waco, Texas. Yeah. 33:20 Wild how much fraud there is out there. It was a lot of money. It was an actual 33:25 lot of money that they stole. Jeez. Unfortunately, not surprising though. It's just kind of crazy. Like 33:32 I'm just learning how involved I have to be. Like on that Vegas property, I get a call from the property management 33:38 company because now I work with a PM company down there for that property. They're like, "Oh, the the AC unit's 33:44 out. We need to get this fixed immediately in the next 24 hours cuz it's hot." And I'm like, "Okay, gotcha." They send someone out. And the the bill 33:51 was like or the proposal was like $12,000 for a new unit. And this house is only 2 years old. So, I call cuz it 33:58 said the unit was 9 years old. So, I call and I'm like, "You guys need to replace a 2-year-old HVAC unit for 12 34:04 grand." They're like, "Oh, it's 12 years old." So, I'm like, "What the heck?" So, I don't know if someone cuz we've had to get it repaired before. So, I don't know 34:11 if someone one of these contractors stole it and put a old HVAC unit there or if there's just like I have no idea 34:17 what's going on, but I ended up getting someone to fix it for like two grand. 34:22 Just shocking. a property that I manage, funny enough, also in Waco, but a property I managed down in Waco, Texas, 34:29 the ACs would go out too regularly. And what we found was the guy, and this 34:35 was I had someone else in the market hire some of the the vendors I work with who had had a ton of experience already 34:41 in Waco. So, I I merged with another manager down there. What we found is the AC tech that they hired, we caught him 34:49 on camera breaking the ACs. So he would he would fix them and then he'd come back a week later and he would he would 34:56 do some some minor damage to where he'd have to come back and keep repairing them. So he was generating his own 35:01 business. We caught him. We had just installed the cameras. It was the first week I see his truck 35:07 there. I'm like, "Wait a second. We don't have any any work for him." Peared up. He's in there messing with the ACs. 35:12 Two days later we get a report and AC's out. I was like, "Son of a bitch." Oh my god. Wow. You see him rolling up 35:20 with a baseball bat, you're like, "Uh, that should be a wrench like to fix it. What are you doing?" 35:25 Wild. He He knew just what to to mess with in there where it's like, "That is crazy." 35:30 He knows I don't know ACs. An AC goes out. I'm like, "Okay, well, we need to, you know, we need to do something with 35:36 Freon or we need to fix a condenser." Wow. For me, it's all just words. I'm like, 35:41 "I don't know. I don't know the first thing about an AC that I know about buying real estate and managing it. I 35:47 know the cost. Yeah. But dude, yeah, it's uh the amount of fraud in every industry has been 35:54 shocking for me in the last five years of being in business. It's just it's rampant and it's everywhere and it's all 36:01 the time. If you're if you're not watching everyone, your employees, your contractors, your property manager, uh 36:08 it feels like someone's going to try to steal from you. Yep. Very frustrating. 36:13 Yeah. No. 12 grand for an AC. Really? Yeah. Yeah. And then I 36:19 Yeah, I know. Couldn't believe it. Oh, that's wild. Right. If you had if you had one piece of 36:25 advice to a newer investor who wanted to either get into the ADU thing, just get into burr real estate, get into 36:32 development, any of the things that you've done. If you had one piece of advice to new investor, what would it be? I would say, 36:38 gosh, it's hard to say just one because there's so many, but I would say find your competitive advantage and just go 36:45 for it. Stop. stop analyzing the deals like crazy. I mean, definitely do your due diligence, but do your homework, do 36:53 your research, listen to all the podcasts, all that, and then just just take action on it and get going. 36:58 There we go. Think less, do more. Yeah, that is that is great advice. And I think that's where about 95% of uh 37:05 wannabe investors or small investors are stuck. Yep. You are overthinking this and you will 37:10 find that most of the stuff you're doing is not relevant yet. Yep. Exactly. 37:16 Do the thing. Create some problems. Get that bad tenant in there. Pay your stupid tax and move on. 37:22 Exactly. Yeah. And don't want don't think it should be easy and don't want it to be easy because like, you know, 37:28 the harder it is, the better you're going to get. You're going to get bigger, better, faster, stronger, the more problems there are and harder it 37:34 is. So, don't And the harder it is, the more of your competition is not going to do it. 37:39 Exactly. You You want to be in something challenging. If it's easy money, it's not going to last long. 37:44 Yep. Exactly. Yeah. Cuz I'm getting hit up all the time now for from people who, you know, want to do this strategy or 37:51 build adus or anything like that. And I'll talk to them all the time and it's like, hey, have you, you know, listened 37:56 to a thousand hours of podcast and just, you know, learn everything you can as fast as possible. And it's like, oh, I 38:02 listen to one podcast and then talk to them for however long and they just take no action and just, you know, always 38:09 want to do it, but never actually just pull the trigger and do the deal. Yep. It is a It is one of the most common 38:15 things in the world. Well, if someone did have questions for you or wanted to connect with you, what is the best way to reach you? 38:22 Uh, you can find me on Instagram at sugarshane Sanders. SugarShane Sanders. There we go. 38:28 I like it. And I might Yep. And I might be rolling out a course soon on like how to how to 38:34 implement this strategy. actually been talking to your good buddy Caleb about it, but been putting a lot of thought 38:41 into that and might get something like that going here pretty soon. I've wanted to see someone enter the space and 38:47 really go all out on teaching this strategy. There's groups that teach it as a part of what they do, but all the 38:54 best operators, all of them have said they don't want to make a course. I've actually been reaching out to some ADU guys uh over the last two years now. 39:01 Yeah. And a bunch of them are like, "Yeah, I mean, one of them's like, "Hey, I I give away all the information for free and uh here's my plans for ADUs." 39:09 And that's fine. You don't have to make money, not everything. That's awesome. But there's no one who's like, "Hey, I'm 39:15 dedicated to building a community who's actually doing this." 39:20 Yep. I know. Exactly. Yeah. Cuz like high level it is pretty simple, right? buy the property, build, condoise, but 39:28 within that there are literally thousands of details and so many things you got to watch out for like all your 39:33 due diligence with, you know, utility easements and it just goes on and on and on. So, it is pretty technical, but you 39:41 know, not rocket science by any means. By the way, for those people out there who are listeni 39:47 ng this being like, "Wait 39:47 a second, why do they why do these guys want to sell all their knowledge?" For context, over the last year and a half, 39:53 I think I've spent about $480,000 in ad spend. It is not free to build an 39:59 excellent community. If you want to share stuff for free, you can touch a couple people and that's fine. You can do that. The one guy who wants to do 40:05 that, awesome. If you want to build an awesome company that impacts a lot of 40:11 lives, turns out you're in an industry that has a lot of obstacles and you have 40:17 to spend a little bit of money to build the thing. Yeah. It's not that it's it's not about making 40:23 a bunch of money. It's about having the biggest impact. Anyone who wants to do that, just so you guys know, that's what 40:29 it looks like with these paid courses. The the biggest ones cost millions and millions of dollars to run. The 40:34 midsighted one can still cost hundreds of thousands of dollars, which means yes, you have to pay to play to get a 40:41 quality mentorship in today's economy. It's just how it works. Because if if 40:47 Shane doesn't do it, someone else will spend a million dollars a year and become the guy in the space. And guess what? You're gonna have 40:54 to pay that guy instead of Shane. So Shane, I'm a fan. You started a community. I like the fact 40:59 that you started in small town America and you're making it happen. Ellensburg's a cool freaking town for 41:05 those who haven't been. Yeah. My wife went to Central Washington University. They're they're remote campus over in De Mo. 41:13 Yeah. But nice. It's a cool college. It's a cool town. You guys have What is the What is the 41:18 brewery there? They they make that Irish death which like the best Iron Horse. Yeah. Iron Horse brewing. They have the best 41:24 stuff brewery in the state. That was all of my college. That was you go to the the 41:32 Burger and Blues uh bar and you get a picture of Irish death. That is like the thing. 41:38 That's the stuff right there. Great beer, great area. But this is the 41:43 type of stuff that I really do want to see someone who's like I don't want to see another Seattle guy with a course 41:50 quite honestly. Small town came out of Ellensburg. Hey, guess what? We're making a bunch of money. We're getting 41:55 some free land. We're building houses. We're doing the Burr method in a new way with the state law. I love everything 42:00 about it. Yeah, I appreciate it. Yeah, I I love what you're doing, too. I've been, you know, following you for a while now. 42:06 It's It's really impressive. I'm just to see how much you have going on. As soon as I think you're kind of capped out, it 42:13 seems like you just keep rolling and going and going. So, I like watching what you're doing. You're you're doing the right step. Uh I 42:19 found I I do tend to cap out and whenever that happens, we need to find more people and it's a hard push. Right 42:25 now, I think I'm going to make six hires next week and two fires. Wow. But it is a constant like, okay, if we 42:31 want to get to the next level, what people do we need to get there? I have an org chart for everything. My whiteboard, every time we have a 42:37 mission, I write the mission on the whiteboard and we just do the little branches of, okay, if we got to this 42:43 scale, we need someone here and then we need these people on acquisition and we need these people on management. Within 42:48 management, we need these roles and we have to map out, okay, who do we have in our org who can wear these hats? who's 42:54 already tapped out and who else do we need to hire? And that that is how in my experience that's all you do to build a 43:01 business is you're like, I am tapped out. We need more humans. Let's go. Let's go find our humans. And 43:07 I'm taking notes. I'm taking notes because this is what I need to do to start building this up. It's it is it is fun when you build 43:13 something that expands beyond yourself. I would have never guessed five years ago. I left the Co-Star group as an 43:19 employee. I never guessed that I would have 40 plus people in my various orgs 43:24 five years later. And I'm excited to see where this goes 5 years from now. I one thing I know, it never looks like how 43:31 you map it out. But it's a good first step. You go, hey, here's what I think I need. And then you 43:37 find out, you know, if you're lucky, you were half right and you adjust and you pivot and you grow. It's fun. It's fun. 43:43 But uh guys, this is an awesome entrepreneur. I love that you're taking advantage of the new laws as they come 43:48 out. That is the you can play in blue ocean, which is open ocean where where 43:54 Shane got started, or you can play in red ocean, which is where everyone's going. Everyone's advertising every I 43:59 want less competition. I want something that's new and fun and exciting. You found that here. You're on the front 44:06 end of it. Absolutely fantastic. Everyone reach out to Sugar Shane here. Sugar Shane Sanders on Instagram. Sugar 44:12 Sean Ali. He's the what? He's Ollie's a lightweight. I I don't know that the 44:18 He's the guy with the colored hair. Yep. Yep. Shane is the uh Shane is the 44:23 is the scrappy young fighter in the space. I'm betting on him. You guys should bet on him. Guys, thanks for 44:29 hanging with us. This is the Owner Meeting podcast. Bye, Multif Family Strategy. We'll see you all on the next episode.
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